Microsoft Windows Me -- The Millennium DOES Begin in 2001

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Event Summary

Windows Me, the operating system formerly known as Millennium Edition (TOSFKAME), will eliminate support for many networks. And it's running late. La plus a change

[CNet] March 15, 2000 - Microsoft (NASDAQ:MSFT) has dropped support for some networking technology from its upcoming Windows Me consumer operating system in a move analysts say is intended to nudge customers to the company's more lucrative Windows 2000 software.

Windows Me, formerly known by its code-name, Millennium, will not include technology that allows users to connect directly to corporate local area networks (LANs) running Novell (NASDAQ:NOVL) or Banyan (NASDAQ: BNYN) systems software, the company confirmed.

Unlike previous Microsoft operating systems, Windows Me, expected to debut this fall, is positioned solely for home users, who would be unlikely to connect their PCs to corporate networks. Microsoft argues that the networking technology being dropped from Windows Me is more of a hassle for consumers, not a convenience.

Banyan and Novell both say the decision will not have much of an effect on their customers, who generally use Windows NT or Windows 2000.

Windows Me is Microsoft's first purely consumer-focused version of Windows. In designing the upgrade, Microsoft originally sought to bolster the way the operating system hosted digital media entertainment, gaming, home networking, and shared networking. The company also wanted to make it easier to use than its predecessor.

In addition, the product is scheduled to include Internet Explorer 5.5, the latest version of Microsoft's browser, also currently in beta testing.

Market Impact

Can you imagine how nasty things would get if the business and consumer sides of Microsoft were split up after the antitrust decision? Windows Me doesn't just eliminate Novell & Banyan support - it also leaves out full Active Directory functionality. Active Directory is one of the principal new features in Microsoft Windows 2000, released on 17 February 2000. Many of the most desirable features of Windows 2000 networks, such as IPSec, Intellimirror, file replication, and encryption, require Active Directory.

Just say cha-ching. Microsoft is clearly pushing the business PC buyer to stay away from Windows Me and Windows 98 (upgrade street price $97) in favor of Windows 2000 (upgrade street price $189). There's still a lot of Windows 95 and Windows 98 in the corporate world, and this will spur further upgrades to Windows 2000.

When Windows 2000 was released in February 2000, there were few Windows 2000-specific applications. This announcement may help fix that. There's a clear message for business-oriented independent software vendors (ISV's). Rather than write once for two platforms - 9X/Me and NT/2000, Microsoft is strongly suggesting you write once for one platform - Windows 2000 - and forget about Windows Me.

This also makes life harder for Novell. Novell already makes its own client software, but a majority of business users just use the Microsoft-provided Novell client. This makes it incrementally harder to continue supporting NetWare servers. Windows 95 & Windows 98 were both positioned as consumer products - and they included the LAN support.

At the same time, ship dates for Windows Me vary. Estimated ship dates have varied in the press, and beta testers have doubted that Microsoft will make a ship date in 3Q 2000. Microsoft is still publicly committed to shipping Windows Me in 2000, although a fourth quarter shipping date would be too late for many holiday PC sales.

Right now, Microsoft has tied the release of Internet Explorer 5.5 to Windows Me. If Windows Me hits further delays (40% likelihood), Microsoft is likely to release IE 5.5 independently of Windows Me.

User Recommendations

To sum up, a product that will ship later than expected probably won't contain essential business networking features. This means you can rule out buying Windows Me. You should budget for an extra $100 more, per seat, for new purchases of Windows 2000 in lieu of Windows 98. And you should at least contemplate Linux desktops. After all, if Windows Me is delayed much more, it may never ship.

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